The fundamental principle of cryptocurrencies is that neither a person nor a group may have any influence over the creation of a specific currency. The whole cryptocurrency ecosystem generates the predetermined quantity of a certain coin. A previously established and well-recognized value controls the rate of production. By using a peer-to-peer network, it allows the transmission of virtual currencies, which are also known as costless cryptocurrency units, between client programs. Users deal directly with each other without a middleman (government) between them and may store their own money, as opposed to relying on banks to store, transmit, and receive money. Given that anyone may transmit money directly, each bitcoin user should take precautions to guard against fraud and manipulation.
In order to keep digital transaction records, cryptocurrency uses a ledger. Because this ledger is publicly accessible, anybody may check the transactions that have already been made. Transactions are made safe, transparent, effective, and permanent with the help of the public ledger. With the aid of this ledger, users are freed from the necessity of having faith in a bank to retain their cryptocurrency as well as in the ability of the person with whom they are transacting business to really pay them. Instead, users can observe how thousands of individuals are sending, receiving, verifying, and documenting money.
Cryptocurrency is now a transparent, autonomous, decentralized system thanks to blockchain technology. When a transaction is carried out from A to B in this case, a record of the transaction is then added to the ledger, which is held by all bitcoin users. Following the verification procedure, the transaction record is added to the ledger. The process of verifying transactions is carried out by miners, who subsequently append the verified transaction to the public ledger. Miners are compensated with bitcoins for validating transactions. An very powerful computing system is required for mining.
A collection of rules and processes that are pre-programmed to permit trading between cryptocurrencies and between fiat currencies and cryptocurrencies is known as a cryptocurrency trading system. In order to combat price manipulation, cybercrime, and transaction delays, cryptocurrency trading platforms were developed. We must take into account the capital market, base asset, investment plan, and methods while creating a cryptocurrency trading system. The most crucial component of a successful bitcoin trading system is its strategies, which will be described below. Commercially available cryptocurrency trading platforms include CCXT, Freqtrade, Capfolio, 3Commas, and Ctubio. Investors may get rapid customer service, fairness, and help with expert trading strategies from reputable third-party consulting firms from these bitcoin trading systems.
Numerous cryptocurrency trading systems and bots have been developed as a result of the growth of computer science and cryptocurrency trading.
Cryptocurrency systems
• CCXT
CCXT is a cryptocurrency trading platform that supports several Bitcoin, Ether, and Altcoin exchange markets as well as merchant APIs. It comes with a uniform API out of the box and offers optional normalized data. Any trader or developer may use this data to build a trading strategy and use the APIs to access open deals (Ccxt 2020). To connect and transact with bitcoin exchanges and payment processing providers globally, one uses the CCXT library. For storage, analysis, visualization, indication construction, algorithmic trading, strategy backtesting, automated code generation, and associated software engineering, it offers instant access to market data. Construct trading algorithms, are intended for programmers, experienced traders, data scientists, and financial analysts.
• Blackbird Bitcoin Arbitrage
A C++ trading system called Bitcoin Arbitrage automatically carries out long- and short-term arbitrage between Bitcoin exchanges. Market-neutral techniques that don’t move money between exchanges can be produced using it (Blackbird 2020). The goal of Blackbird is to profit organically from these transient price variations between several exchanges while being market neutral. In contrast to other Bitcoin arbitrage systems, Blackbird really short-sells Bitcoin on the short market rather than selling it. This feature offers two significant benefits. First off, the technique is never market-specific; fluctuations (increasing or dropping) in the price of bitcoin have no impact on its performance. This removes the significant hazards associated with this tactic. Second, switching between Bitcoin exchanges is not necessary with this method. Purchase and sale agreements take place on two different exchanges. Dealing with transmission lag is not necessary.
• StockSharp
Including 48 cryptocurrency exchanges, StockSharp is an open-source trading platform for use on every market in the globe (Stocksharp 2020). It offers a free trading charting application and C# library. On this platform, trading may be done manually or automatically (using a conventional or high-frequency trading robot).
• Capfolio
Capfolio is a paid proprietary cryptocurrency trading system with a sophisticated backtesting engine and a platform for expert analysis (Capfolio 2020). It is compatible with four distinct cryptocurrency exchanges.
• 3 commas
A customized bitcoin trading system platform called 3 Commas may accept both stop-loss and profit orders simultaneously (3commas 2020). This system supports twelve different cryptocurrency exchanges.
• Ctubio
A low latency (high frequency) bitcoin trading system called Ctubio (Ctubio 2020) can quickly place or withdraw orders using supported bitcoin exchanges. Additionally, it has a charting system that may display the state of a trading account, including completed transactions, goal positions for fiat currencies, and more.
• Freqtrade
The Python-based Freqtrade bitcoin trading robot system is free and open-source. It is managed by telegram and built to support all significant exchanges. It includes tools for backtesting, mapping, money management, and machine learning-based strategy optimization (Fretrade 2020).
• Golang Crypto
A Go-based cryptocurrency trading system called Golang Crypto Trading Bot (Golang 2020) exists. Users can simulate a sandbox environment to evaluate the technique. A false balance for each currency must be specified for each trade if simulation mode is enabled.
• CryptoSignal
CryptoSignal is a reputable technical analysis bitcoin trading system. (Cryptosignal 2020). Over 500 currencies from Bittrex, Bitfnex, GDAX, Gemini, and other exchanges may be tracked by investors. Technical analysis tools used automatically include momentum, RSI, Ichimoku Cloud, MACD, etc. The system sends notifications via email, slack, telegram, and other channels. Essentially, CryptoSignal offers two features. It offers modular code to simplify implementing trading techniques and is also simple to install using Docker.
• Catalyst
A catalyst is a tool for visualizing and analyzing the bitcoin trading system (Catalyst 2020). It makes trading strategies simple to explain and backtests them on historical data (daily and minute resolution), offering analysis and insights into the success of certain methods. Users may exchange and organize data using Catalyst, and they can create scalable, data-driven investment plans. Catalyst offers historical price information for all crypto assets in addition to supporting trading execution (from minute to daily resolution). Users may smoothly switch between the two different trading modes because of Catalyst’s backtesting and real-time trading capabilities. Finally, Catalyst incorporates statistics and machine learning tools (including matplotlib, scipy, statsmodels, and sklearn) to assist in the construction, analysis, and visualization of the newest trading systems.
Cryptocurrency Types
• Bitcoin
The most widely utilized cryptocurrency in the world today is Bitcoin. It is a decentralized digital money, and no administration oversees how it operates. Peer-to-peer networking exists, and all digital currency transfers were completed without the aid of a third party. Bitcoin transfers are validated by network codes that employ a unique cryptographic technique, and a blockchain record has been created for the public ledger of distribution.
• Ethereum
Since it was created on the Ethereum platform, Ethereum may also be referred to as Ether. It was established in 2013 by computer programmer and cryptocurrency researcher Vitalik Buterin. It also has the ability for smart scripting. It functions using a modified version with a transaction-based payment mechanism that is based on bitcoin. It is a blockchain-based open-source platform for cryptocurrencies. It focuses on executing any decentralized application’s source code and monitoring who owns binary transactions.
• Litecoin
Litecoin was established in 2011 by Charles Lee. It is peer-to-peer money that is utilized by the world’s payment networks. On a standard desktop computer, the mining of Litecoin may be done slowly.
• Ripple
Chris Larsen, the creator of the startup OpenCoin, introduced Ripple in 2012. It serves as a digital payment network and cryptocurrency for financial transactions. The ripple payment system is an extremely quick, safe, and inexpensive way to transmit money.
• Zcash (ZEC)
Zcash is built on the original Bitcoin source code. Jihn Hopkins, a scientist at MIT, created it. Because users may transfer and receive Zcash without revealing the sender, receiver, or amount transacted, privacy is the key benefit of Zcash.
